The Pound New Zealand Dollar (GBP/NZD) exchange rate had soared since markets opened this morning following the latest Federal Open Market Committee (FOMC) meeting minutes yesterday evening.
At the time of writing the GBP/NZD pairing are trading around the NZ$2.0062 level as the New Zealand Dollar is unable to find any support as the global market mood weakens further.
Pound (GBP) Supported by Cautious Market Mood
The Pound has found itself support against many of its major rivals this morning as a souring market mood drives demand towards Sterling.
Following the FOMC meeting minutes from the US yesterday evening markets became more nervous and as the mood weakened the Pound was able to capitalise against the New Zealand Dollar’s weakness.
Whilst a lack of economic data from the UK has capped any major gains for GBP exchange rates ongoing positive domestic coronavirus developments from the UK continue to support the Pound.
Figures released from the Office for National Statistics (ONS) today have shown than Covid-19 antibody levels remain high across the UK.
With 9 out of 10 people testing positive for antibodies as increased vaccinations rollouts bolster antibodies in younger people.
New Zealand Dollar (NZD) Slides on Risk-Off Trade
The New Zealand Dollar (NZD) has weakened this morning on the back of the latest FOMC meeting minutes, and the Reserve Bank of New Zealand’s (RBNZ) choice not to raise interest rates, as first expected.
Following the stance from the FOMC that the Federal Reserve look to taper back asset purchasing sooner than first expected, the market mood became more jittery and the New Zealand Dollar tumbled.
More so, earlier in the week markets had expected a policy-change from the RBNZ where the bank was expected to raise interest rates from 0.25% to 0.5%.
The change did not happen however, owing to the rise in global coronavirus cases and the ongoing outbreak in New Zealand’s closest neighbour, Australia.
A statement from the RBNZ, read:
‘Today’s decision was made in the context of the Government’s imposition of Level 4 COVID restrictions on activity across New Zealand.’
‘The need to reinstate COVID-19 containment measures in some regions highlights the serious health and economic risks posed by the virus. Persistent and elevated health risks are promoting ongoing global supply chain disruptions, and are acting to constrain productive capacity and prolong inflationary pressures.’
Pound New Zealand Dollar Exchange Rate Outlook: UK Retail Sales in Focus
Heading into the weekend, Pound investors will be looking towards the latest UK retail sales figures from July.
If retail sales rise as forecast then the Pound could find itself pushing higher across the board during Friday’s session.
An absence of economic data from New Zealand will see traders keeping an eye on the global market mood throughout tomorrow.